An increasing number of overseas investors are entering the London property market, with Savills recently reporting that 55 per cent of all transactions for central London real estate in 2011 were concluded by international buyers. This is a three per cent rise over 2010, while the firm also noted nearly three-quarters of property investments valued at over £5 million were accounted for by foreign purchasers. Director of Savills research Yolande Barnes commented: "The best addresses in the best locations have become elevated to international asset class status and are valued as a relatively safe store of wealth in an uncertain world."
Naomi Heaton, chief executive at London Central Portfolio (LCP), agreed that many investors see the UK capital's prime real estate as a safe haven for their money, adding that "others wish to accumulate through an asset-backed investment strategy". She also highlighted the weakness of sterling against other currencies, particularly the Chinese renminbi, noting this could encourage more investors from the Far East to consider the opportunities available in London.
In fact, a recent report published by LCP pointed to the increasing number of Chinese buyers entering the central London property market. Head of investment at the firm Hugh Best explained such investors are "looking at diversifying their property exposure from China". He added this may be an especially appealing prospect at present due to the predicted fall in Chinese real estate values in 2012, coupled with the strength of the renminbi against the pound. Meanwhile, the higher education system in the UK may be another reason Chinese buyers are attracted to London property.
Ms Heaton stated that pupils from China are now the biggest single student group in the country, with more than 90,000 of them heading to the nation to study in 2010. Families who have the means to send their children overseas for an education are often keen to buy them a property to live in, the firm asserted, with many buyers in this demographic favouring new or off-plan apartments. Mr Best said: "There could be an explosion in the number of Chinese families looking for, and being able to afford, a UK education and a London property to go with it."
- Wednesday 25 January 2012